GROUND ZERO: CANTOR FITZGERALD; Cantor Seeks To Relocate To Union Sq.

Cantor Fitzgerald, the bond broker that lost 658 employees in the attack on the World Trade Center, is negotiating to build a $100 million headquarters in a former department store in Union Square, an area that has not traditionally drawn financial services firms.

Howard Lutnick, the chairman of Cantor Fitzgerald, has long vowed to rebuild his company and has pressed his case everywhere from City Hall to Albany and Washington. According to city and state officials and real estate executives, he has focused on Union Square, an area 2.5 miles north of Wall Street and one that is more known for its high-end restaurants and residential buildings.

But it is there that he found a vacant building, which had housed a succession of department stores, from Orbach's to J. W. Mays and Bradlees.

To transform the building, on the south side of 14th Street between Broadway and University Place, Mr. Lutnick has sought tens of millions of dollars in state and federal grants and tax breaks.

When state and city officials told Mr. Lutnick this year that they could provide only about $9 million, he turned his sights on Congress. Late last month, it appropriated $33 million for any company that ''suffered a disproportionate loss of its workforce.''

''That's code for Cantor Fitzgerald,'' said a legislative aide who was involved in the negotiations, ''although a couple of other firms fit the bill, including Aon.''

State and city officials have sought to stablize the downtown market by offering companies cash grants if they commit to staying in Lower Manhattan. Charles A. Gargano, chairman of the Empire State Development Corporation, said they now had an additional tool with the recent federal appropriation.

''The bond exchange concept is an interesting one,'' he said. ''We'll try to provide as much help as possible.''

Mr. Lutnick did not return calls requesting comment, but an executive at Cantor Fitzgerald confirmed that the company was negotiating to build a world headquarters on 14th Street.

The deal is far from finished, but at least some denizens of Union Square were already putting out a welcome mat.

''This area is home to a tremendously diverse mix of uses,'' said Karen Shaw, executive director of the Union Square 14th Street Business Improvement District and Local Development Corporation. ''That's a key advantage to any commercial enterprise like a bond exchange. It would be a terrific addition to the neighborhood.''

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After the terrorist attack last September, tenants of the World Trade Center like Zurich North America, Empire Blue Cross Blue Shield and the Port Authority of New York and New Jersey found refuge in the Union Square area.

But Cantor Fitzgerald could have a major impact on the neighborhood, with the company promising to move about 680 employees into the former department store, which is owned by Vornado Realty Trust. According to people who have been involved with the proposed deal, the building would be converted into a commercial condominium, with Cantor owning the bulk of the building. Vornado is negotiating with several retailers, including Whole Foods, the Container Store and Forever 21, to occupy the lower floors, according to retail brokers.

Cantor, whose offices were at the top of the north tower of the trade center, lost 658 of its 960 employees in New York. Still, the company was able to reopen its bond trading operation within days of the attack.

In June, Cantor moved to temporary quarters in Midtown, at Lexington Avenue and 57th Street, where it now has 475 employees. And the company, the leading bond broker, expects to make about $100 million in the year ending on Oct. 1.

But Mr. Lutnick also wants to build a new headquarters for his company. State and city officials offered about the same amount per employee that they had given other downtown companies. But Mr. Lutnick, whose hard-charging style did not always endear himself to officials, wanted much more.

According to Congressional aides, Mr. Lutnick had originally gone to Congress asking for more than $50 million to be set aside specifically for Cantor.

One government official recalled Mr. Lutnick's saying, ''We think we're entitled to it, not only because of the loss of lives but because the concept is so brilliant.''

But Mr. Lutnick found a willing ally in Representative C. W. Young of Florida, chairman of the House Appropriations Committee, according to several legislative aides. ''He took a personal interest.''

Mr. Young did not return calls requesting comment.

Still, the aides said, the legislation ultimately did not specifically mention Cantor and the amount was less than Mr. Lutnick had originally requested.